Moving is big business. One in three U.S. households plans to move in the next five years. In the process, Americans will spend more than $7.4 trillion buying homes and $2.2 trillion on rent as they seek new places to live. They will also spend more than $700 billion renovating their current homes.
What's driving this movement? Many are unsatisfied with certain aspects of their living situations. The Demand Institute has termed these gaps between what Americans have and what they say they need or want the “Satisfaction Gap.”
To better understand these gaps, the Demand Institute recently surveyed more than 10,000 households about their current living situation and what’s important to them in a home. The survey found that unmet needs and desires emerge among all Americans—renters and owners, movers and non-movers, young and old, affluent and not. While these varied groups have different items on their wish lists, certain trends cut across the population.
So what are American's biggest headaches with their humble abodes?
Perhaps surprisingly, the largest disparity between consumers' haves and wants lies with their homes' energy efficiency—or lack thereof. While 71% of households think energy efficiency is important, only 35% describe their homes as energy efficient.
While some consumers may be interested in the social good that increased efficiency can bring, costs are most likely driving many people's interest. Housing is expensive. One-third of the respondents said household expenses ended up much higher than they expected when they moved into their homes. And energy costs are increasing quickly: Average household spending on home electricity has grown 56% since 2000, outpacing other housing-related expenses (which have grown at 38%).
This has many households looking for ways to make their homes more energy efficient—90% of households have taken some measure in the past five years to consume less energy. Consumers' growing desire for energy efficiency will drive renovations, maintenance, and new technology use: For instance, 51% of households would consider buying an energy-use monitor.
America’s housing stock needs work, and consumers' next biggest concern is home improvements. More than three-quarters (78%) of households in the U.S. say their home requires repairs. The Great Recession led households to delay major upgrades and repairs: Home renovation spending decreased each year from 2007 to 2010. Since 2010, however, spending has been steadily increasing. Consumers plan to increase spending on home improvement in the next few years. A desire for move-in-ready homes will drive a continuing demand for new home construction.
Given that the kitchen remains one of a home’s most important rooms, upgrading these spaces is consumers' third concern. Similar to overall home repairs, spending on major appliances and renovations declined for several years following the recent Great Recession. However, Americans are reporting that they are cooking and eating at home more than five years ago, so kitchens should only grow in importance. The kitchen will remain a key driver of home renovation activity. New “smart” appliances could drive continued growth in home appliance spending: 49% of households would consider purchasing a smart appliance.
While energy efficiency and renovations can affect households across ages, some of consumers' top "wants" are related to specific generations' needs. And because Baby Boomers and Millennials are the biggest generations (and similarly sized), their needs appear among the top satisfaction gaps.
The population is getting older—the number of households headed by someone 65 or older is expected to grow 10 times faster than other households between now and 2020. As we reported previously, most Baby Boomers hope to “age-in-place,” but many are still looking for homes where they can age more comfortably. Among Americans, 76% say having an aging-friendly home is important to them, but only 53% of consumers are satisfied with their current homes' features. Older movers will still purchase single-family homes—similar to what they have now—but will place greater emphasis on ease of maintenance and a single story.
On the other hand, Millennials came of age during or since the Great Recession in the U.S. While many in the country suffered financially during the period, Millennials in particular have faced significant economic challenges.
Today, nearly 40 million households in the U.S. are considered to have a housing “cost burden”—that is, they spend 30% or more of their income on housing expenses. This problem has been worsening as rents increase, but wage growth remains stagnant: Nearly half of all renter households in the U.S. have a cost burden. The country needs more affordable housing options. Hybrid options between renting and owning, such as lease-to-own arrangements, may provide opportunity for renters who aspire to ownership. In fact, 69% of Millennials say they would consider such an arrangement.
For more information about the country's other top satisfaction gaps, download The Housing Satisfaction Gap report.